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Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2025

Note 7 Goodwill and Intangible Assets

Goodwill and other intangible assets

In connection with our acquisitions, the Company’s goodwill was $306.0 million as of March 31, 2025. Goodwill is measured as the excess of the fair value of consideration paid over the fair value of net assets acquired. No goodwill impairment was recorded during the three months ended March 31, 2025 or the year ended December 31, 2024.

The gross carrying amount of other intangible assets and the associated accumulated amortization at March 31, 2025 and December 31, 2024, are presented as follows:


	March 31, 2025						December 31, 2024
	Gross				Net		Gross				Net
	carrying		Accumulated		carrying		carrying		Accumulated		carrying
	amount		amortization		amount		amount		amortization		amount
Core deposit intangible	$	91,566	$	(56,747)	$	34,819	$	91,566	$	(55,417)	$	36,149
Customer relationship intangible		17,000		(4,556)		12,444		17,000		(4,024)		12,976
Acquired technology intangible		2,300		(805)		1,495		2,300		(690)		1,610
Total	$	110,866	$	(62,108)	$	48,758	$	110,866	$	(60,131)	$	50,735

The Company is amortizing intangibles from acquisitions over a weighted average period of 9.8 years from the date of the respective acquisitions. The core deposit and customer relationship intangibles are being amortized over a weighted average period of 10 years, and the acquired technology intangible is being amortized over a weighted average period of five years. The Company recognized other intangible assets amortization expense of $2.0 million during the three months ended March 31, 2025 and 2024.

The following table shows the estimated future amortization expense during the next five years for other intangible assets as of March 31, 2025:


Years ending December 31,		Amount
For the nine months ending December 31, 2025	$	5,809
For the year ending December 31, 2026		7,664
For the year ending December 31, 2027		7,542
For the year ending December 31, 2028		6,142
For the year ending December 31, 2029		5,790

Servicing Rights

Mortgage servicing rights

MSRs represent rights to service loans originated by the Company and sold to government-sponsored enterprises including FHLMC, FNMA, GNMA and FHLB and are included in other assets in the consolidated statements of financial condition. Mortgage loans serviced for others were $0.3 billion and $0.9 billion at March 31, 2025 and 2024, respectively.

Below are the changes in the MSRs for the periods presented:


	For the three months ended March 31,
	2025		2024
Beginning balance	$	4,835	$	4,911
Originations		62		115
Sales		(1,811)		—
Amortization		(132)		(114)
Ending balance		2,954		4,912
Fair value of mortgage servicing rights	$	4,457	$	7,523

During the three months ended March 31, 2025, the Company sold rights to service loans totaling $203.7 million in unpaid principal balances from our mortgage servicing rights portfolio. As a result of the sale, the book value of our mortgage servicing rights intangible decreased $1.8 million and generated a pre-tax gain of $0.6 million included in mortgage banking income in the consolidated statements of operations.

The fair value of MSRs was determined based upon a discounted cash flow analysis. The cash flow analysis included assumptions for discount rates and prepayment speeds. Discount rates ranged from 10.0% to 10.5% and the constant prepayment speed ranged from 6.3% to 12.4% for the March 31, 2025 valuation. The discount rate ranged from 10.0% to 10.5%, and the constant prepayment speed ranged from 6.2% to 13.3% for the March 31, 2024 valuation. Included in mortgage banking income in the consolidated statements of operations was servicing income of $0.9 million and $0.4 million for the three months ended March 31, 2025 and 2024, respectively.

MSRs are evaluated and impairment is recognized to the extent fair value is less than the carrying amount. The Company evaluates impairment by stratifying MSRs based on the predominant risk characteristics of the underlying loans, including loan type and loan term. The Company is amortizing the MSRs in proportion to and over the period of the estimated net servicing income of the underlying loans.

The following table shows the estimated future amortization expense during the next five years for the MSRs as of March 31, 2025:


Years ending December 31,		Amount
For the nine months ending December 31, 2025	$	253
For the year ending December 31, 2026		309
For the year ending December 31, 2027		273
For the year ending December 31, 2028		242
For the year ending December 31, 2029		215

SBA servicing asset

The SBA servicing asset represents the value associated with servicing small business real estate loans that have been sold to outside investors with servicing retained. The SBA servicing asset is evaluated and impairment is recognized to the extent fair value is less than the carrying amount. The Company evaluates impairment by stratifying the SBA servicing asset based on the predominant risk characteristics of the underlying loans, including loan type and loan term. The Company is amortizing the SBA servicing asset in proportion to and over the period of the estimated net servicing income of the underlying loans. The Company serviced $125.0 million and $132.0 million of SBA loans that have been sold into the secondary market as of March 31, 2025 and December 31, 2024, respectively. For the three months ended March 31, 2025 and 2024, the Company recognized SBA servicing asset fee income totaling $0.2 million and $0.1 million, respectively.

Below are the changes in the SBA servicing asset for the periods presented:


	For the three months ended March 31,
	2025		2024
Beginning balance	$	2,862	$	2,440
Originations		42		266
Disposals		(68)		(102)
Recovery		90		104
Amortization		(149)		(74)
Ending balance		2,777		2,634
Fair value of SBA servicing asset	$	2,777	$	2,634

The Company uses assumptions and estimates in determining the fair value of SBA loan servicing rights. These assumptions include prepayment speeds, discount rates, and other assumptions. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. For the three months ended March 31, 2025 and 2024, the key assumptions used to determine the fair value of the Company’s SBA loan servicing rights included weighted average lifetime constant prepayment rates equal to 15.7% and 15.8%, respectively, and weighted average discount rates equal to 9.3% and 10.2%, respectively.

The following table shows the estimated future amortization expense during the next five years for the SBA servicing asset as of March 31, 2025:


Years ending December 31,		Amount
For the nine months ending December 31, 2025	$	250
For the year ending December 31, 2026		304
For the year ending December 31, 2027		267
For the year ending December 31, 2028		235
For the year ending December 31, 2029		207